The demand for bitcoin in Japan has surged over the past few days as Japanese exchanges including BTCBOX and bitFlyer recorded the highest 24-hour bitcoin trading volumes. The daily trading volumes of the two Japanese exchanges were substantially higher than that of a few of the world’s largest bitcoin exchanges such as Kraken, BTC-E, OKCoin, BitFinex and Coinbase,
From April 4 to 5, BTCBOX processed US$3.2 million worth of bitcoin at an average price of US$425 and bitFlyer processed nearly US$2.8 million worth of bitcoin, both respectively controlling 7.09% and 6.15% of the entire bitcoin exchange market share.
— Tuur Demeester (@TuurDemeester) April 5, 2016
It is difficult to specify the exact reason behind the sudden surge in demand for bitcoin in Japan. However, many experts predict that the overall demand for the digital currency has risen among Japanese investors after the Japanese government announced that with stricter control and regulatory framework, bitcoin will be classified as an alternative currency. The government also hinted that a BitLicense like regulatory framework could be issued against bitcoin startups and exchanges, which could make it more difficult for traders to buy and sell bitcoin through conventional methods. The Financial Services Agency stated that this “legal framework” would help build a healthier and safer bitcoin ecosystem in Japan. An official from the FSA said, “The proposed regulations are designed to promote healthy businesses.”
Yuzo Kano, leader of the Japan Authority of Digital Assets explained last month that the government should take action against the importation of bitcoin from other countries to Japan by taxing these transactions. Also, by implementing strict AML and KYL policies (Know Your Customer), exchanges must be in strict control of user data and sensitive financial information, which should be handed over to government agencies and the Japanese law enforcement in potential investigations.